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| *Ostroff, Fair and Company>>>Canada Taxes |
How does a RRSP catch up loan work? |
I haven't maximized my RRSP contributions in the last 6 years. I'm planning to get a loan to catch up. Will my refund be equivalnent to the amounts that I would have received if I had made these contributions during those years. Will I get a lump sum or several smaller amounts over a specific period. In my opinion, I think you should be careful before you take out a loan to catch up on RRSP contributions. There are several pieces of information you need to consider - at what interest rate is the loan? and what is you marginal tax rate? Go see an independent tax professional (like an accountant). Don't go to the bank for advise!!! Let's face it, the banks and mutual fund companies are in the business of selling you investments. Do you think that the guy who sold you the RRSP (for which you had to borrow money to buy), gives a rat's #!ss if you default on a loan payment?? Probably not. I'm not a tax expert, but I think the loan idea for the RRSP really works to your benefit if only you can pay it all back in the same tax year. you will get a lump sum that will be your fed tax rate % of the loan amounts you will save that %. That is if you file it all at one time. |
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